CRA says I owe tax, but I never got anything in the mail

You receive a call from the Canada Revenue Agency demanding you pay taxes. You're caught off guard because you believe you never received a notice of assessment. Can you still challenge the assessment?

In a previous blog post, we discussed the strict time limits that apply to challenging CRA’s assessments. In this post, we will discuss what happens when a taxpayer and CRA disagree over whether the CRA sent notice of an assessment to a taxpayer.

The Legal Presumption of Receipt

Under the Excise Tax Act and the Income Tax Act, if the CRA mails a notice of assessment, it is deemed to have been received on the day it was mailed. This applies even if the recipient never actually received it.[1]

This legal presumption can create significant challenges for taxpayers who genuinely never received their notice. As one judge has noted, however, "Parliament has chosen to adopt a rule that makes no allowance for the possibility, however remote, that the taxpayer may miss the deadline for objecting or appealing because of a failure of the postal system."[2]

Challenging the Mailing of the Notice

While the law presumes receipt by the taxpayer if mailed by the CRA, you can still argue that the notice was never mailed in the first place. If your evidence is accepted as credible, this argument shifts the onus to the CRA to prove that it is more likely than not that the notice of assessment was indeed mailed.[3] Typically, the CRA will attempt to prove the notice of assessment was mailed by providing evidence of their mailing procedures.

For the notice to be valid, it must have been mailed to the address that you last provided to CRA. However, there are reasonable limits. For example, a taxpayer cannot deliberately provide confusing address information or failed to update their address with the CRA, thus resulting in the CRA being unable to mail the notice to the taxpayer despite their best efforts.

In some cases, the CRA has failed to meet its onus. Where this happens, this allows the taxpayer to challenge whether the underlying assessment of tax is correct. Please note, just because CRA failed to mail a notice of assessment to you doesn’t mean that you don’t owe tax.

It means only that you may still have the right to challenge whether the CRA’s assessment of tax is correct, either through an objection or an appeal to the Tax Court of Canada.

Conclusion

The best way to avoid an undesirable situation it to ensure the CRA always has your current address and to keep records of all communications with the CRA and copies of all documents you submit. While the law can be strict regarding notices of assessment and time limits, there can still be avenues to challenge assessments if the CRA has made a mistake in following its process.